Many people judge their retirement readiness by one number: how much they have in a 401(k), IRA, or other investment accounts.

But your account balance alone doesn’t tell you whether you’re on track.

For example, someone with $1 million could be less prepared than someone with considerably less, depending on Social Security, pensions, debt, healthcare costs, spending, and lifestyle.

This article from 1st Choice Financial Services provides a realistic retirement savings check to help you evaluate where you stand and what may need attention.

How Do You Know if Your Retirement Savings Are on Track?

Start by comparing what you have today with the retirement you want and what it will reasonably cost.

Take Inventory of What You Have

Look at the resources you’ll have available and when you expect to retire, including:

• 401(k)s, IRAs, and other retirement accounts
• Social Security benefits
• Pension income
• Investments and other assets
• Additional income sources
• Mortgage and other debt
• Expected retirement age

Determine What Your Retirement Will Cost

Next, think about what you actually want retirement to look like. Will you stay in your current home or move? Travel regularly? Help children or grandchildren? Spend more on hobbies, recreation, or home projects?

Estimate your expenses by separating necessities such as housing, food, utilities, and insurance from more flexible spending such as travel and entertainment.

Then compare those costs with your expected income. How much will need to come from your investments each month? Will your savings need to last 20 or 30 years—or potentially into your 90s?

Rather than relying on a generic savings number, a 1st Choice retirement planning specialist in Central Pennsylvania can evaluate your situation and give you a clearer idea of how to move forward.

Have You Accounted for Expenses That Are Easy to Underestimate?

Some retirement expenses are difficult to predict and are often overlooked.

Healthcare and Medicare

Medicare doesn’t make healthcare free. Depending on your coverage, you may still have premiums, deductibles, copays, prescription expenses, and costs for dental, vision, and hearing care. Possible long-term care needs should also be part of the discussion.

Inflation

A retirement could last 20 or 30 years. During that time, groceries, utilities, insurance, healthcare, and other expenses are unlikely to remain at today’s prices. Accounting for inflation is an essential part of retirement planning in Pennsylvania, particularly when estimating how much income you may need later in life.

Taxes

The balance shown on a retirement account statement isn’t necessarily the amount you’ll have available to spend. For example, $1 million in a traditional IRA isn’t equivalent to $1 million in a Roth IRA because qualified Roth IRA withdrawals are generally tax-free. In contrast, traditional IRA distributions are generally taxable at the federal level.

Looking at the tax treatment of your accounts gives you a more useful picture of what your savings can provide.

Are You Taking Full Advantage of Your Remaining Working Years?

The final five to 10 years before retirement can provide valuable opportunities to increase your savings. Potential ways to save more include:

• Contributing enough to receive your full employer match
• Contributing to a Roth IRA if eligible
• Adding to an HSA if you qualify
• Taking advantage of catch-up contributions available at age 50+
• Using the higher SECURE 2.0 catch-up limit available for certain workers ages 60–63
• Self-employed? Consider options such as a SEP IRA or Solo 401(k)

Will Your Savings Produce Enough Retirement Income?

A large account balance doesn’t automatically translate into sufficient monthly income. Your retirement income could come from several places, including:

• Social Security
• Pension benefits
• Investment withdrawals
• Interest and dividends
• Annuities, when appropriate
• Other income sources

The question is how it all comes together to cover your expenses.

Withdrawals from investments also need to account for how long your money may need to last, inflation, market performance, and changing spending needs. Taking too much too early could create problems later, while being unnecessarily restrictive could keep you from enjoying money you’ve spent decades saving.

1st Choice’s retirement advisors in Central Pennsylvania can help you make the most of your income sources once your regular paycheck ends.

Is Your Investment Mix Still Appropriate As Retirement Gets Closer?

The investments that made sense at 45 may not be appropriate at 60 or 65. 

Taking excessive risk near retirement can leave money needed for upcoming expenses exposed to a major market decline. However, moving too heavily into cash or conservative investments can create a different problem when your money may need to last for decades.

Risk tolerance, diversification, asset allocation, concentrated holdings, and expected withdrawals all deserve review as retirement approaches.

Periodic reviews can also determine whether your portfolio still matches your circumstances as markets, expenses, and priorities change.

What Happens if Retirement Doesn’t Go According to Plan?

Being on track shouldn’t depend on everything going perfectly.

What happens if the market drops shortly after you retire? Could you manage an earlier-than-expected retirement? What if healthcare costs are higher than anticipated, one spouse dies, inflation stays elevated, or you live well into your 90s?

Stress-testing different situations can reveal weaknesses before they become problems. You can see how changes in spending, investment returns, retirement age, or income could alter the outlook and identify where adjustments might be needed.

This type of analysis is a key part of wealth management in Central Pennsylvania, where your retirement decisions are evaluated together rather than individually.

When Should You Have Your Retirement Savings Reviewed?

You don’t have to wait until your retirement date to take a closer look at your savings. A review is particularly useful:

• Five to 10 years before retirement
• Before claiming Social Security
• Before choosing a pension option
• After a major market move
• Following a job change
• As you approach RMD age
• After a significant family or financial change

These checkpoints provide an opportunity to compare where you are today with where you want to be when you retire.

Is It Time To Review Your Retirement Planning in Pennsylvania?

Knowing whether you’re on track requires more than checking an account balance.

The 1st Choice team can review contribution levels, income needs, investment risk, Pennsylvania tax considerations, and how different sources of retirement income work together.

We welcome pre-retirees and retirees from Harrisburg, Hershey, Halifax, Lancaster, Lebanon, Enola, Mechanicsburg, and communities throughout Central Pennsylvania.

Ready for a retirement checkup? Reach out today to start the conversation.

FAQs

How much money do I need to retire comfortably in Pennsylvania?

There isn’t one amount that works for everyone. The amount you need depends on your retirement age, lifestyle, monthly expenses, Social Security, pension income, debt, healthcare costs, taxes, and how long your savings may need to last. A personal projection is more useful than relying on a generic savings target.

How often should I check whether my retirement savings are on track?

An annual review is a reasonable starting point. You should also revisit your retirement outlook after major changes involving your job, income, investments, family, health, or expected retirement date.

What should I do if I’m behind on retirement savings?

Start by determining the size of the gap. You may be able to increase contributions, take advantage of catch-up provisions, adjust spending expectations, reconsider your retirement date, or review your investment mix and future Social Security income. A 1st Choice retirement advisor for Pennsylvania residents can also help identify which changes could make the greatest difference.

This is not endorsed or affiliated with the Social Security Administration or any U.S. government agency.

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